IMF, Zimbabwe mull fresh SMP

HARARE – The
International Monetary Fund (IMF) has reached an agreement with Zimbabwe to
undertake a second staff monitored programme (SMP) on the southern African
country to help it carry out more reforms to stabilise its ailing economy.

“Successful implementation will assist in building a
track record and facilitate Zimbabwe’s reengagement with the international
community, said Gene Leon, who led an IMF mission to Harare which ended last
week.

He said the proposal was still subject to approval by
the Fund’s management.

Whatever policy direction the IMF and the Government
of Zimbabwe will pursue is likely to revolve around the Transitional
Stabilisation Programme (TSP), a blueprint launched in October to fight
economic volatilities stemming out of serious foreign currency and fuel
shortages, a huge fiscal deficit and subdued exports triggered by
deindustrialisation.

The TSP emphasises fiscal consolidation, the
elimination of the Reserve Bank of Zimbabwe’s financing of the country’s fiscal
deficit, and adoption of reforms that allow market forces to drive the
effective functioning of foreign exchange and other financial markets.

An IMF statement, quoting Leon, confirmed this
strategy.

An SMP involves the IMF’s staff monitoring
a country’s economic targets and policies.

There is also another IMF undertaking
called an IMF programme, where it provides financial support to a country.

Zimbabwe’s last had such programme
between 2013 and 2015.

Zimbabwe hopes that under the direction
of the IMF, it will be able to ride over a debt crisis that has left the
country in distress.

The country has paid off its US$110
million debt to the IMF, but cannot access fresh lines of credit until it pays
off debts to other multilateral lenders- the World Bank (WB) and the African
Development Bank (AfDB).

But under a deal agreed in Lima, Peru in
October 2015, at the WB and IMF spring meetings, Zimbabwe undertook to clear
the IMF $110 million, WB$1,15 billion and AfDB $601 million by the end of April
2016.

The debt plan was expected to clear
Zimbabwe’s arrears, accumulated since the turn of the century, and open up
opportunities for fresh loans for the capital starved economy.
Former
Finance Minister Patrick Chinamasa, who had doggedly pursued the deal, would
later change tack, saying although President Robert Mugabe’s government had
secured funds to clear the arrears, it now sought to implement economic reforms
first, to avoid relapsing into more arrears.